Saturday, February 18, 2017

This writer was once a visiting scholar at the Public Policy
Center at SRI International in Palo Alto California. SRI was once the Stanford Research Institute
and it was begun by some faculty at Stanford offering applied research and
consulting to all sorts of organizations.
Over the years it evolved into a very involved research and consultancy
organization with international reach, which explains its current name.

The Public Policy Center at SRI offered consulting services
to local and regional governments.It
specialized in strategic planning around an economic development theme.SRI believed that if communities partnered
with their local universities and colleges they could identify industries that
may be attracted to the area.As an
example, if a university had a great biological sciences program, then the city
could identify an area of land close to the university where a pharmacological
or biotech companies could locate.The
university graduates would be a ready source for employees and the faculty
could partner for research opportunities.

In 1985, the city of San Antonio developed a strategic plan
in which it partnered with Austin to develop the area along the I-35 with
high-tech industry.It was
successful.Graduates from several
University of Texas campuses help populate the area and develop new high-end
communities in the area.

The new businesses are from a class of industries called
knowledge-based industries.The people
who work in these fields make a lot of money.Salaries for database administrators, biotech researchers, systems
designers and the like often have salaries in the comfortable six-figure income
levels.We created an educational
elite.The impact is that we have a new
class of worker and the income distance between these workers and our
traditional production worker is very significant.Many people criticize the income distances
between the financial people and the rest of us as the haves and
have-nots.In reality the
knowledge-based worker needs to be included the “haves” category.If one
is a non-college graduate, or even a college grad in a non-STEM discipline,
which includes science, technology, engineering and math, that person has a far
less chance of achieving the income heights of a STEM graduate.

There are a number of conclusions that can be drawn from
this effort to promote high-tech industry through governmental planning.The first is that high-tech industry pays
better than other industries on average.

The second is more complicated.In order to enjoy the benefits of high-tech
industries, a community has to be within the area occupied by a high-tech university.The more advanced and important the high-tech
industry, the more the university is a research university, which narrows the
areas that can enjoy the benefits of the new town and gown relationship.The idea is that as new academic research
produces new ideas for products, those faculty who develop them can move into
businesses at a nearby university associated business park.Most of these town and gown business
relationships exist on the coasts, and in the case of key cities in select
states such as Texas, Illinois, and others.Clearly, rural areas and central cities rarely enjoy this new high-tech
relationship between business and academic communities.

The third follows from the second.Those people who work in these new industries
tend to want to live in the new high-end gated communities with large homes,
grass filled islands along highways and main streets, and new shopping centers
anchored with Nordstrom and Saks Fifth Avenue stores.Clearly, the rural areas and central cities
of our daily life tend not to enjoy the wealth generated by these new town and
gown relationships.

The forth is more of an insight than a conclusion.It is that these new industries tend to group
the responsibilities of development, engineering, and product definition and
leadership in these new town and gown communities within the United States.Production and support services tend to be in
areas with lesser incomes, if here at all.

The fifth follows from the forth.Production of these new products is often
shipped overseas.Up until now, Apple has
built all of its products in China.It just announced that it is transferring
production of the iPhone to India.Many chips that empower our computers and communication
devices are produced overseas.

The sixth follows from the fifth.Knowledge is fleeting.Simply because a university and business
develop an idea into a product doesn’t mean that they will always enjoy the
fruits of their efforts without some type of intellectual protection.There is something called technology
capture.Solar panels were the invention
of creative people in the United States but China has become their largest
manufacturer.Simply developing an idea
does not ensure one’s long-term success.

This is the basis of the new economy, the new growing
economy.

There are a few problems with this.One is that the new economy is not the whole
economy.In fact, high-tech jobs do not
even represent a majority of all jobs in the US workforce.It is a growing sector and other, more
traditional sectors, are decreasing.One
interesting fact is that though the US economy has grown over the last several
years by only 2% annually, it can be divided into 5% for the top 20% of the
country and zero percent for the remaining 80%.The inference is that a small part of the of
the country is growing and the rest is not.This is not the formula for political stability.

It is important to note is that the high-technology sector
along I-35 between Austin and San Antonio is only a few hours away from
Cleburne and other poor communities along the State Highway 67 corridor.A previous post cited the business and
employment problems of poor communities such as Cleburne.The success of the I-35 high-tech sector is
geographically constrained, and economic problems close to but outside that
area are not benefitting from the I-35 success.That means that the people who live just outside the I-35 corridor are not
sharing in its promise.The hopes of the
residents have gone unmet.

The point is that the town and gown approach to transforming
America’s workforce has its limitations.Economic dislocations remain.The
economic benefits of town and gown effect the town and gown area itself.Outside the area, say 30 to 45 minutes, there
are displaced people with lives and hopes that remain unimproved.In fact, they are worse off because the
investment has gone to new industries, not to old.The economic separation between the upper and
lower levels of society is larger.And
not everyone can transfer into the new industries, a subject that will be
discussed in the next post.

So, there are places of significant poverty in the United
States that are within a hour of some of the most successful high-tech
communities populated with children whose parents cannot afford new houses and
cars, and who definitely cannot afford the education that will transport their
children an hour away to their regional town and gown.

About Me

Who am I? I am a guy who has had a number of jobs in both the private and public sectors, most in finance, planning, and management. My educational background includes studies in public administration, public policy, finance and accounting, computer systems, mathematics, and recently, economics. I grew up as a conservative Republican who loved Nixon up until he broke my heart. I have also liked some Democrats such as John Kennedy and Birch Baye. This is my first attempt ever at trying to be public with my opinion. I would prefer spending my time taking classes, learning new things, enjoying close relationships, and looking forward. But if more of us from the old middle would be more vocal, perhaps our politics will change. My educational background includes a PhD in Public Administration with emphases in public finance and public policy, a Masters of Accounting, and other degrees. My experience includes project management positions with a defense company, a computer company, and a transportation company. I have also taught at several universities and colleges in two states.